Is it legal for a 401k to not allow non hardship withdrawals?
Since your employer sets up the plan and uses a plan administrator to handle the details of the plan, it is up to them whether they will allow a hardship withdrawal or not. It has nothing to do with the investment company. And, since 401(k)’s are not savings accounts but retirement accounts, the government has rules to make access to you money more difficult. Yes, it is your own hard earned money, but it was your decision to put the money away for retirement. One of the biggest errors made by people who put money in a 401(k) is they listen to plan administrators who try to convince you it is a good thing to put lots of money in a retirement plan. (Max out the contribution.) The more money you put into the plan, the more money they make in administrative fees. http://www.dol.gov/ebsa/publications/401k_employee.html. Employees try to put in the maximum before they have established a substantial liquidity
